With supply arbitrage in mind, please consider Invasion of Spanish Builders Angers France Struggling to Compete. The earth movers digging out a sandy pit in the beach town of Biarritz could be any construction site in France. Except the builder of the 300 homes and its workers are Spanish. In the neighboring town of Anglet, a Spanish company built the concert hall inaugurated this month. A kilometer up the road, in Bayonne, a Spanish company is building a 15-lodging apartment block. And that’s just in a small corner of southwestern France. The losing French bidders are crying foul, saying the Spanish pay lower wages and cut corners on regulations. The Spanish, fleeing a construction slump and an unemployment rate of 26 percent at home, say they’re just using European Union rules allowing free movement of businesses and workers. “We thought for a long time we were in an industry that couldn’t be shifted offshore,” said Didier Ridoret, president of the French Constructors’ Federation, or FFB. “Instead, the reverse happened: the offshore came to us.” With the best French bid in Anglet priced 40 percent higher than the winning offer, reversing the trend won’t be easy. French builders say a majority of homes in border regions are now being built by Spaniards, Portuguese and Italians. These contracts are often awarded solely on the basis of price,” said Patrick La Carrere, head of the builders’ federation in southwest France. “The Spanish have much lower charges so they can always undercut us.” For companies hiring Spanish builders, the choice is clear. The 2 million-euro contract for the Anglet concert hall was awarded to Altuna y Uria SA, based in the Basque town of Azpeitia, after its bid was 800,000 euros less than the best French offer, said Jerome Poties, head of culture for the town. According to accounting firm KPMG, Spanish companies pay 30 percent of a worker’s salary in social security contributions, and the employee pays 6.35 percent. In France, companies can pay as much as 45 percent and labor another 22 percent. It’s not just lower charges that help Spanish firms, said Maxime Alimi, an economist at Axa Investment Managers in Paris. “There have been reforms in Spain that have made labor more flexible,” Alimi said. “In France, salaries are extremely rigid. It’s a tendency that’s not likely to change.”
Posted on: Tue, 28 Jan 2014 07:50:29 +0000
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